Via Yahoo Finance

Airline regulators are expected to this week launch a crackdown on carriers which have failed to refund families for flights cancelled due to coronavirus, as the industry reels from new restrictions over Spain.

The Civil Aviation Authority is understood to have drawn up a list of the worst culprits, with millions of customers still owed billions of pounds after being told they could not fly.

Enforcement action could end up with airlines being banned from operating in the UK.

An announcement has been pencilled in over the coming days, although this timetable may slip as the watchdog grapples with the impact of a fresh two-week quarantine for arrivals from Spanish airports.

Airlines’ failure to hand out refunds has sparked fury from passengers who have been forced to axe holidays. The CAA has now whittled down the list of firms facing action to a handful of carriers. It remains unclear which companies could be subject to a sanction.

Tui has already cancelled all holidays on the Spanish mainland up to Aug 9.

Tui, Virgin Atlantic, Ryanair and easyJet are among a slew of household names to have faced criticism for dragging their heels on refunding customers. Many would-be holidaymakers have been waiting months to get their money back, despite rules which say refunds for flights should be handed out within a week of a cancellation.

Demands for a refund are expected to spike again in coming weeks as airlines are forced to reconsider their summer holiday schedules amid fears over a second wave of Covid abroad. Tui has already cancelled all holidays on the Spanish mainland up to Aug 9.

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In a bid to avoid huge payouts as the pandemic struck, many travel firms made it easier for holidaymakers to receive a credit note or voucher than a refund – allowing them to hold on to vital cash to prop up their finances.

The pandemic grounded all but a handful of flights and exposed a destructive flaw in the finances of the travel industry. Many carriers are dependent on payments for flights not due to take off for weeks, months or even years to prop up their cash reserves and use this money to fund operations now.

Industry insiders said that stripping airlines of their operating licence was only a worst-case scenario and the process could take years to complete.

One of the most high-profile examples of the CAA taking enforcement action in recent years was its battle with Ryanair, which refused to compensate passengers for flights cancelled by strikes over the summer of 2018.

A spokesman for easyJet said the firm is currently processing refunds for customers in less than 30 days and has increased its call centre staff to deal with demand. He added: “We have engaged with the CAA throughout the pandemic and we do not expect any enforcement action from them.”

A spokesman for Virgin Atlantic said: “We would reassure all customers that if they’ve requested a refund for a cancelled trip, it will be repaid in full, and the work to process refunds is our priority. In order to accelerate the process, we have boosted the size of the teams handling refunds and trained additional staff to use the required systems, which is increasing our capacity to process refunds.”

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The CAA, Tui and Ryanair did not respond to requests for comment.